Stocks lose as politico-economic uncertainties linger

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SOURCEThe News
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Stocks on Monday shed 1.3 percent, dragged down by cement, auto and banking shares, largely due to the ongoing political as well as economic uncertainty that is seen as a major obstacle in the way of any substantial recovery in the short-term, dealers said.

Topline Securities in a market review said equities extended losses for the third consecutive session amid expectations of further monetary tightening after International Monetary Fund’s (IMF) approval of a bailout package worth $6 billion.

“Resultantly, the bourse touched its 29-session low at 33,742 points, while sentiment remained negative across the board,” the brokerage said. Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 1.31 percent or 447.34 points to close at 33,742.68 points, whereas KSE-30 hit a low of 1.35 percent or 218.24 points to end at 15,906.46 points.

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Of 306 active scrips, 49 moved up, 237 retreated, and 20 remained unchanged. Ready market volumes stood at 59.555 million shares, as against 51.245 million in the previous session. Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said the uncertainty over the exchange and interest rates whether they would go up further or not weighed heavy on investors.

“The business community has expressed reservations about the recently taken budgetary measures, which appear to be devastating for the industry as a whole; however, after the arrival of the first tranche from the IMF, the market might show some recovery in the coming sessions,” Ahmad added.

Muhammad Faizan Munsehy, head of foreign institutional sales at Next Capital, said the stock market’s decline deepened where market was pricing in the harsh reality that the economic slowdown was more likely to linger and a quick resolution was not in sight in the near term.

Selling was seen across the board with cements, oil and gas exploration and production, and banking stocks contributing the most to the fall of the market, Munsehy added. A leading analyst from a local brokerage house said “the market witnessed a positive uptrend for a brief period in early trading hours; however, mounting selling pressure following opposition’s fresh push in its anti-government campaign weighed down on index in later hours”.

Investors punished power generation and cement sector as the government’s measures lack the seriousness to control power losses and address tax concerns of the cement sector, the analyst added.

Sentiments were further weakened as the experts have estimated the net impact of the total $6 billion of IMF finance facility was likely to stand at merely $1.6 billion out. Concerns over issuance of Rs200 billion sukuk for oil and gas marketing companies, and power sector saw major bearing on these sectors and aggressive selling was observed in Sui Northern Gas Pipelines, Pakistan State Oil, and Hubco.

The highest gainers were Sapphire Fibre, up Rs48 to close at Rs1045/share, and Sanofi-Aventis, up Rs25 to finish at Rs600/share.

Weekly SPI inflation up 0.83 percent

Companies that booked highest losses were Sapphire Textile, down Rs69.95 to close at Rs1340/share, and Bata Pakistan, down Rs25 to close at Rs1325/share.

K-Electric Limited remained the volume leader with a turnover of 7.444 million shares. The power utility’s scrip, however, lost Rs0.21 to close at Rs4.01/share.

With a turnover of mere 1.316 million shares, Sui Northern Gas recorded the lowest volumes, whereas it lost Rs3.48 to end at Rs66.17/share.

(This news/article originally appeared in The News on July 9th, 2019)

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